(1.) Which of the following is true of a company operating at full capacity?

a.The products manufactured are sold at prices two times higher than the prevailing market prices.

b.Any additional production increases fixed and variable manufacturing costs.

c.Any additional production does not increase fixed manufacturing costs.

d.Any additional production always decreases selling and administrative expenses by a considerable amount.

(2.) The normal selling price of a product is determined by:

a.multiplying the cost amount per unit by the markup.

b.dividing the cost amount per unit by the markup.

c.adding the cost amount per unit to the markup.

d.subtracting the cost amount per unit from the markup.

(3.) Which of the following is true of the Robinson-Patman Act?

a.The act regulates the accounting methods followed by firms in the United States.

b.The act requires all reporting entities to organize their accounting and financial reports systematically.

c.The act prohibits price discrimination within the United States unless price differences can be justified by different costs.

d.The act regulates spending levels and tax rates in the economy.

(4.) The _____ prohibits price discrimination within the United States unless price differences can be justified by different costs.

a.Budget and Accounting Act

b.Economic Opportunity Act

c.Capital Markets Act

d.Robinson-Patman Act

(5.) _____ focuses on the effect of alternative courses of action on revenues and costs.

a.DuPont analysis

b.Trend analysis

c.Differential analysis

d.Common size analysis

(6.) If the revenue earned from manufacturing and selling cell phones is estimated to be $555,000 and that of tablets is $495,000, what will be the differential revenue?

a.$1,050,000

b.$600,000

c.$60,000

d.$495,000

(7.) Which of the following is true of the competition-based concept?

a.It sets the price according to the demand for a product.

b.It sets the price according to the overhead costs allocated by competitors to a product.

c.It sets the price according to the differential cost incurred by competitors in producing a product.

d.It sets the price according to the price offered by competitors.

(8.) Which of the following is true of differential income (or loss)?

a.It is the amount of increase or decrease in cost that is expected from a course of action as compared to an alternative.

b.It is the difference between differential revenue and differential cost.

c.It is the amount of increase or decrease in revenue that is expected from a course of action as compared to an alternative.

d.It is the difference in incomes or losses of the current year and the previous year.

(9.) When a production constraint exists, the best measure of profitability is the:

a.differential revenue per production constraint.

b.unit contribution margin per production constraint.

c.markup per production constraint.

d.differential cost per production constraint.

(10.) When a company attempts to maximize its profits, subject to its production constraint, it uses _____.

a.the unit contribution margin of each product per production constraint

b.the unit target cost of each product per production constraint

c.the unit selling price of each product per production constraint

d.the unit product cost of each product per production constraint

(11.) Which of the following is true of a production constraint?

a.When a production constraint exists, the best measure of profitability is the differential revenue per production constraint.

b.It is a point in the manufacturing process where the demand for the company's product exceeds its ability to produce the product.

c.When a company has a production constraint in its production process, it should attempt to maximize its product's demand in the market.

d.It is a point where total revenues equal total sales.

(12.) The normal selling price must be set high enough to cover:

a.only differential costs.

b.all costs and expenses and provide a reasonable profit.

c.all sunk costs and opportunity costs.

d.only selling and administrative expenses.